Your rights when shops hit trouble

Fashion retailer Republic went into administration last week and the firm joined an ever-growing list of businesses that have gone under recently – Blockbuster, HMV and Comet to name but three.

And while these closures are obviously bad news for employees and shareholders, they can also make life tricky for consumers, who may be half way through a transaction when the company closes its doors.

So what are your rights if a trader stops trading?

It’s important to know at the outset why the business closed. If it was simply a case that they decided to stop trading, then you can write to them in the normal way to pursue your outstanding business. If necessary, put in a claim at the Small Claims Court.

This process can be complicated if the trader was acting as a limited company rather than a sole trader. In the former case, the individuals concerned may not be liable for any debt.

All of the companies listed above, however, have run into problems because they didn’t have the money to carry on as before. In this situation, getting your money back, your goods delivered or your item repaired is a good deal more complicated.

Your first port of call is to find out who the administators are. This shouldn’t be hard as a notice will appear on the trading premises and in the cases of large companies the details will be widely reported in the media.

It’s the administrator who will decide whether to honour gift cards, exchange goods and obtain refunds etc. For larger companies, it’s again worth checking the media on a regular basis as the policies are likely to be in the news.

Register your claim with the administrators. That makes you a creditor and gives you the best chance of getting some or all of your money back. You should be bear in mind, however, that if there are lots of creditors your chances of receiving a refund are limited.

But there are other ways to protect yourself.

It’s always worth paying for items worth over £100 on plastic. That’s because if the goods aren’t delivered or were faulty and the company goes bust, you should be able to claim the money back from the credit card company. This also applies to credit agreements. You only need to have put the deposit on the card.

Debit cards don’t come with the same level of cover, but if you used a Visa or Mastercard debit card, you may have some level of protection via the Chargeback scheme, so it’s worth making enquiries with your bank.

Equally, any manufacturer’s or third-party warranty that came with the goods could be a useful alternative when a trader has gone bust.

If you have an item that’s due for delivery, and you have paperwork and proof of payment, it might be worth driving to the warehouse and seeing if you can pick it up. But be quick, before the administrators get involved.

And be proactive. The media often trails news of companies that are about to go under, so this is not a good time to visit their website and do some shopping, or place an order for a new kitchen. You’re just setting yourself up for a fall.

Similarly, if you have gift vouchers and hear rumours of a company’s impending demise, spend them quickly! Once the doors are closed, you’re almost certain to be waving goodbye to your money.

Overall, be realistic. Once a company has gone into administration, there are any number of people who want their money back. You could be waiting a long time to see all, or indeed any, of it.